Legislature(1995 - 1996)
04/11/1996 08:10 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 416 - OMNIBUS STATE FEES & COST ASSESSMENTS The first order of business to come before the House State Affairs Committee was HB 416. CHAIR JEANNETTE JAMES called on Nancy Slagle, Office of the Governor, to present the bill. Number 0081 NANCY SLAGLE, Director, Budget Review, Office of Management and Budget, Office of the Governor, thanked the committee members for hearing HB 416 again. She stated it was an intricate part of the Governor's budget plan. The bill provided for the charging of fees for certain services within state government. She said she would explain the various sections of the bill and representatives from the departments were here to answer any questions. Number 0145 MS. SLAGLE explained Section 1 addressed the real estate surety fund. It allowed the Department of Commerce and Economic Development (DCED) to charge for the cost of a claim hearing for the real estate surety fund. It also allowed the state to free some general fund dollars. It was a small amount, however. The section was also supported by the industry. Number 0197 REPRESENTATIVE JOE GREEN asked Ms. Slagle if Section 1 impacted the problems with the dedicated funds adversely? Number 0206 MS. SLAGLE replied, "no." Section 1 allowed the DCED to charge the cost of the hearing against the surety fund. It was not dedicated for a specific purpose. In the past the ability did not exist for the department. Number 0247 REPRESENTATIVE GREEN said other revenue enhancing fees could not be dedicated. The money was put into the general fund and then budgeted back out. Section 1 sounded like a specific dedicated fund. Number 0286 MS. SLAGLE replied Section 1 actually broadened the purpose of the fund. REPRESENTATIVE GREEN asked Ms. Slagle if the fund would have to be budgeted annually? MS. SLAGLE replied, "yes." Number 0299 CHAIR JAMES asked Ms. Slagle where the fund came from? Number 0305 MS. SLAGLE replied a representative from the department was here to answer that question. CHAIR JAMES suggested moving forward instead. She would ask the question again later. Number 0316 MS. SLAGLE moving forward, explained Section 2 allowed the Alaska Commission on Postsecondary Education (ACPE) to charge fees for processing educational institutions' applications for authorization to operate, along with application fees for the institutions' agent permits. Number 0393 CHAIR JAMES asked Ms. Slagle where the money for the ACPE came from? Number 0410 MS. SLAGLE replied a large portion of its' budget came from the loan processing, the student loan portion of the corporation. The principle interest that was generated from the revolving loan funds was used to support the corporation. Section 2 would allow the commission to charge a fee for the other portion of its responsibility so that a corporate receipt would not be used. Number 0466 CHAIR JAMES asked Ms. Slagle if the ACPE would collect fees from the University of Alaska? Number 0476 MS. SLAGLE replied, "no." It would collect fees from other private types of institutions, such as, vocational schools. It did not affect postsecondary education. Number 0511 CHAIR JAMES said she was concerned about moving the money from one hand to the other. She stated, if a fee was going to be charged, it should generate new money. MS. SLAGLE agreed with Chair James. She explained Section 2 would be a new fee for the state. Number 0539 MS. SLAGLE moving forward, explained Section 3 would authorize the State Commission for Human Rights to establish and charge fees for education, training services, information, and materials the commission provided to the public. Number 0592 CHAIR JAMES asked Ms. Slagle if this was new money? MS. SLAGLE replied, "yes." CHAIR JAMES wondered if the fee for a training service would apply to a state agency. Number 0618 MS. SLAGLE replied the section did not apply to services provided to another state agency. This applied to the private industry only. Number 0632 REPRESENTATIVE CAREN ROBINSON said the State Commission for Human Rights just came to Juneau for a two day training for the Juneau Economic Development Council that brought together several private businesses. She further stated she knew the commission provided several weeks of training for the Marine Highway System employees. She was not sure if the commission should not charge state agencies. She understood, however, it was directed at the private industry that demanded days of training, when at this point the only expense covered was travel. Number 0677 CHAIR JAMES replied the transfer of money from one account to another did not help the state gain anything. Number 0709 REPRESENTATIVE ROBINSON replied she agreed with Chair James. However, she also believed it was fair to help support the cost of the staff person absent for long training periods. Number 0744 CHAIR JAMES said she understood the transfer of authority across state agency lines. However, HB 416 was intended to produce revenue. Furthermore, it was also a budget decision. The legislature needed to determine if it wanted to fund agencies that provided these types of services. MS. SLAGLE said the budget process did allow for transfers between agencies. CHAIR JAMES said she understood the concept of the transfer between agencies. She reiterated it was part of the budget process and should be dealt with there and not in HB 416. Number 0862 MS. SLAGLE moving forward, explained Section 4 would establish an administrative fee for self-insured employers under the Alaska Workers' Compensation Act. Most employers currently paid a portion of the cost of running the state workers' compensation program through their insurance premium tax. Self-insured employers, however, were receiving the same state services but were not currently contributing to the cost of running the system. The section would provide for a share in that cost. Number 0921 REPRESENTATIVE BRIAN PORTER asked Ms. Slagle if Section 4 would include municipalities? Number 0930 MS. SLAGLE replied, as written, "yes." It would also include private firms and school districts. Number 0949 REPRESENTATIVE PORTER asked Ms. Slagle if she had a figure amount for the municipalities? Number 0958 MS. SLAGLE replied it dropped approximately $300,000. She called on Paul Grossi, Department of Labor, to address the issue further. Number 0991 PAUL GROSSI, Director, Central Office, Division of Workers' Compensation, Department of Labor, referred the committee members to a handout titled, "1994 Self-insured WC Payments at 4% by Year." He explained the companies would have paid the amount in the second column. Number 1050 REPRESENTATIVE PORTER said, therefore, the budget for the Municipality of Anchorage would be affected by about $86,000. Number 1055 MR. GROSSI replied, "right." It would fluctuate from year to year, however, because it depended on the amount of claims processed. Number 1066 CHAIR JAMES said these are big numbers. She asked Ms. Slagle to continue. Number 1074 MS. SLAGLE moving forward, explained Section 5 would change the biennial fee for a business license from $50 to $75. This would mark the first fee increase since statehood. Number 1112 CHAIR JAMES said that was a narrow increase. Furthermore, the House State Affairs Committee discussed earlier surrounding another piece of legislation the Department of Commerce and Economic Development should provide more information to individuals that applied for a business license. She suggested thinking about the amount further. She was not sure if $75 was enough. It depended on the services provided, however. Number 1192 MS. SLAGLE moving forward, explained Section 6 would provide the Division of Governmental Coordination in the Office of the Governor to adopt regulations to charge for services related to federal consistency determinations and certifications under the Coastal Zone Management Act. The fees charged were intended to speed up the process. Number 1261 REPRESENTATIVE GREEN said any industry in an effort to help move that would favor Section 6. He asked Ms. Slagle, if the language on page 3, line 15, "may adopt regulations to charge fees for services provided," would go beyond the cost of the permit? For example, if there were 10 permits, could the division divide its total operating cost by one-tenth, and charge that amount. Number 1311 MS. SLAGLE replied, "I guess if you were really stretching it, you probably could." It was not the intent of HB 416, however. MS. SLAGLE moving forward, explained Section 7 would authorize the Department of Military and Veterans' Affairs to adopt regulations setting reasonable fees for classes and seminars on emergency response procedures. The department right now could charge fees for spill response training only. She explained the fee charged would be small. It would only cover the cost of transportation or meeting facilities, for example. Number 1368 MS. SLAGLE moving forward, explained Section 8 would authorize the Department of Environmental Conservation (DEC) to adopt regulations setting fees for the regulation of pesticides and broad case chemicals and for the review of subdivision plans for sewage waste disposal or treatment. The fees would provide funding for the technical staff employed to provide those services. Number 1405 REPRESENTATIVE IVAN IVAN asked if the DEC currently had technical staff on board, or did it contract those services? Number 1425 MS. SLAGLE said Janice Adair, Department of Environmental Conservation, was available via teleconference to answer that question. Number 1436 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, said Section 8 would provide funds for existing staff and services. It would replace general fund money as indicated in the fiscal note. Number 1451 REPRESENTATIVE SCOTT OGAN said HB 416 allowed taxation through regulation. He suggested reducing regulations and called for a vote of the people. Number 1517 MS. SLAGLE replied regulations were adopted to respond to and to implement laws. Furthermore, the Administration was looking at streamlining regulations. She cited the bill that recently passed out of the House State Affairs Committee that addressed this issue. Number 1557 CHAIR JAMES said she agreed with the concerns of Representative Ogan. The legislature also played a part in this concern as the law making body of the government. Regulations were used to implement statutes, and statutes needed to be changed. The budget process was also a big concern of hers. She agreed with reducing state spending, but suggested looking at the services first to determine which ones werereally needed. CHAIR JAMES announced she was disappointed that no one from the public or the industry was here to testify today on HB 416. She was concerned about the reaction of the public. She wondered if anybody even knew about the bill. Number 1654 REPRESENTATIVE IVAN said he concurred with Representative Ogan's view of HB 416 as taxation by regulation. He was further concerned about the consumers not having an opportunity to question the amount. There was a public hearing process, if the fees were adopted by statute. He believed that was a better process. Number 1684 CHAIR JAMES replied there was a public process outlined in the Administrative Procedures Act (APA). However, the public was not aware usually until after they "paid the bill." Therefore, it was a responsibility of the legislature to help "tune in the public." She was thankful for Gavel-to-Gavel and the exposure it provided to inform more people. Number 1728 REPRESENTATIVE ROBINSON said, if this was an issue for everybody, she suggested notifying the different groups that would be affected through the House State Affairs Committee. Furthermore, she also believed this issue was a policy decision that the legislature needed to address. The legislature needed to decide if a business license was necessary, for example. If it decided that a license was necessary, then it needed to ensure that the cost of providing that service was funded through the license fee. Number 1789 REPRESENTATIVE OGAN said he was not willing to make a policy decision to give the authority to regulators to tax. He felt it was inappropriate. If a tax was needed, he suggested letting the people vote on it. He reiterated he did not want to give a regulatory agency the authority to tax. He said, "I think we all know what will happen." Number 1818 MS. SLAGLE stated several of the provisions in the bill were set by statute at a specific amount. Furthermore, the bill was trying to cover the cost of providing a service. In most instances the consumer was willing to pay more to insure that he received the services expected from the state. This was especially true of the boards and commissions. Number 1878 CHAIR JAMES said there was a difference, however, for the municipalities as their municipal assistance and revenue sharing were cut and their fees were increased. That was where the most complaints would come from. She cited the coastal zone management issue. She believed the users would be willing to give some money to get it done. The performance would have to match the fee, however. Number 1930 MS. SLAGLE explained there were two amendments that needed to be presented. The first dealt with the Department of Natural Resources (DNR). The second dealt with the Department of Transportation and Public Facilities. She announced there were representatives from each department to answer any questions. MS. SLAGLE explained Amendment 1 allowed the DNR to charge a fee for the direct cost of evaluating or auditing an application for the exploration credits for mine development. Number 2032 CHAIR JAMES said a fee that was established by DNR in 1993 or 1994 was very distressing to her constituents. She explained her constituents wanted to fill a ditch on wetlands. They could not fill it without a $500 application fee. The ditch still existed because they believed the application fee was too much. It was not worth it. This was what made people hate government. Number 2125 JULES TILESTON, Director, Central Office, Division of Mining and Water Management, Department of Natural Resources, said the proposed amendment had the support of the industry including the fees. Furthermore, the amendment would allow the Commissioner to review and approve applications. Number 2221 REPRESENTATIVE ROBINSON asked if this was the same amendment that Representative Richard Foster proposed for the underground mining bill on the floor of the House of Representatives? Number 2231 MR. TILESTON replied, "that's affirmative." Number 2234 REPRESENTATIVE OGAN said he wanted to hear directly from the industry that it supported the amendment and the fees. He suggested another hearing. Number 2266 MS. SLAGLE explained Amendment 2 allowed the Department of Transportation and Public Facilities to charge for the use of state marine or harbor facilities, and required municipalities that lease them to charge a comparable fee. It would not generate money for the state, but it would generate more money for the municipalities. Number 2296 SAM KITO III, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, stated the proposed amendment was part of a bill the department introduced several years ago. He explained the state of Alaska owned close to 100 harbors and had operating agreements with 84 of those harbors and residing municipalities. The agreements required the municipalities to recover the cost associated with the operation of the harbor while the state of Alaska was responsible for the deferred maintenance. The deferred maintenance responsibility was approaching $26 million, however. Therefore, the amendment would permit the department to require a municipality to take into account the replacement cost when charging a user fee, and to direct that money into a separate account to allow the municipalities to take care of the deferred maintenance themselves. The department did not see another method without an increase in the fuel tax or a dedication of the fuel tax to take care of this deferred maintenance problem. Number 2354 REPRESENTATIVE GREEN said he had a problem with the language. He read, "At minimum, the fees may not be less than...." He called it a blank check. Number 2372 MR. KITO III replied there was a minimum charge per lineal foot of moorage space, about $2 per foot, per year. However, some municipalities had not reached that level. The department encouraged them to reach that level in order to recover some of their operating costs. Otherwise, they were subsidized by the local municipality to operate that harbor. Furthermore, the department did not have the authority to ask a municipality to charge more to take care of the deferred maintenance. Therefore, the amendment would help alleviate some of the deferred maintenance concerns of the department. There were many facilities that were in dire need of work to adequately perform for the public. Number 2419 REPRESENTATIVE GREEN wondered if the minimum would be enough to offset the deferred maintenance. Number 2448 MR. KITO III replied a minimum existed now that was not enough to take care of the deferred maintenance needs. The amendment would give the department the authority to request that the municipalities charge more for the moorage rate so that they could recover the maintenance and replacement cost of the harbor facility. Number 2464 REPRESENTATIVE PORTER wondered if the state was responsible for the deferred maintenance. MR. KITO III replied, "yes." The state was responsible through contract for the deferred maintenance of the facilities. Number 2474 REPRESENTATIVE PORTER said he wondered what mechanism would shift the responsibility from the state to the municipality. He realized it would be through the contract based on Mr. Kito's response. Number 2477 CHAIR JAMES said the deferred maintenance problem for the Department of Transportation and Public Facilities was an example of the deferred maintenance problem for the state. TAPE 96-49, SIDE B Number 0000 CHAIR JAMES further said everyone agreed and recognized that on- going maintenance and repairs were needed, but the cost was considered too high. In some cases something new was built instead of dealing with the deferred maintenance. The issue was not being addressed. She was not sure if the amendment would solve the problem, however. It would solve a little bit of the problem, but not the big problem. Number 0032 MR. KITO III said Chair James was correct. The deferred maintenance was increasing. The department had not been built a new facility since 1983, however. CHAIR JAMES said she understood that the department had not built a new facility while the old had not been taken care of. That was not the case statewide, however. Number 0049 REPRESENTATIVE GREEN said he was still concerned that the fee would not be confined to maintenance. He cited the University of Alaska included maintenance in its' budget but never actually used the money for maintenance. He wondered if there was any assurance that a municipality would use the fees accordingly. Number 0078 MR. KITO III replied he was not sure if the department could mandate a municipality to use the money for a certain purpose. It was a statutory requirement that the revenue collected be used for harbors. A provision would be included in the contract that the state of Alaska would no longer be responsible for the cost associated with the replacement of a facility. The municipality would then be responsible for the replacement cost. Therefore, if it used that money for something else, it could not rely on the state for money. Number 0110 REPRESENTATIVE GREEN replied he did no see that written anywhere in the bill. If that was the intent of the amendment, he agreed with it. Number 0116 MR. KITO III said it would be taken care of in the contract language between the state and the municipality. The department did not think it would be necessary to include it in the statute. REPRESENTATIVE GREEN said he did not want to leave it to chance. Number 0130 CHAIR JAMES stated the controversial bill that Representative Carl Moses introduced to raise the marine fuel tax was vetoed by the Governor last year. It was vetoed because it was only a small fix to the overall problem. She believed it was happening again this session. A piece-meal fix was not the solution to this problem. The state continued to make excuses. It needed to prioritize its assets before expanding or buying new services. Number 0200 CHAIR JAMES said she wanted to hear from the municipalities and the industry before taking any action on this bill. Number 0211 REPRESENTATIVE PORTER said he agreed with Chair James, but it was very late in the session. The bill had several committees of referral. Therefore, there was ample time to alert the municipalities and the industry through the rest of the legislative process. Number 0239 CHAIR JAMES agreed it was late in the session. However, if the issue was important enough, it could be waived from a committee, for example. CHAIR JAMES called on Catherine Reardon, Department of Commerce and Economic Development, to the table. She asked her what the attitude was regarding the cost of the business license. She further wanted to know what type of information was being sent to individuals that applied for a business license that explained their responsibilities as a license holder. Number 0271 CATHERINE REARDON, Director, Central Office, Division of Occupational Licensing, Department of Commerce and Economic Development, explained the business license fee generated revenue above and beyond the cost of administering the program. She called it a revenue generator for the state. The increase was not intended to offset increased cost, but to increase revenue. She cited the revenue for FY 95 was $1,873,000 while the cost for administering the program was $346,000. Therefore, the net gain to the general fund was $1,527,000. The state did provide services to businesses through other divisions that were funded from the general fund. She cited tourism as an example. Moreover, the division included a newsletter this time when it sent the business license renewal form. It was an opportunity to share information. Number 0446 CHAIR JAMES said she was concerned about the penalty for not having an additional business license for certain types of activities. Number 500 MS. REARDON replied that information was mentioned on the business license application form now. CHAIR JAMES said that information was especially needed for new applicants. Number 0513 REPRESENTATIVE ROBINSON said she liked the idea of moving from a one year to a two year process. Number 0523 MS. REARDON explained the division moved to a two year license process several years ago. Currently, the cost was $50 every two years of which one-half of the renewals were processed each year. Number 0539 REPRESENTATIVE ROBINSON wondered why a business license was needed every two years. She asked, why not five years, for example? Number 0548 MS. REARDON said that was a choice the legislature would have to make because it was a revenue generating program. The cost would be higher for a five year program to cover the longer time span. The fewer times the department had to process the paperwork, the less the administrative cost, however. Number 0587 CHAIR JAMES said many companies did not stay in business for five years. She envisioned the businesses would want a refund causing more problems for the division. CHAIR JAMES called on the first witness via teleconference in Mat- Su, Rick Brown. Number 0626 RICK BROWN, Platting Officer, Matanuska-Susitna Borough, said he was concerned about the ability of the DEC to continue to provide the services that seemed to get short funded every year. The Wasilla field office did a good job given the staff numbers. If it would not continue to be funded, it needed the ability to offset that loss through fees. He said he liked the wording in Sec. 8, provision (a), and as it pertained to provision (9), "subdivision plans for sewage waste disposal or treatment submitted under AS 46.03.090." He reiterated something needed to be done to help the department and the Wasilla field office. Number 0721 CHAIR JAMES asked Ms. Adair what were the expected charges for reviewing a subdivision? Number 0733 MS. ADAIR replied the fiscal note was based on $250 per subdivision. She said AS 37.10.050 required an agency to set a fee at a level that covered the cost, unless otherwise authorized by the legislature. Currently, the municipality fee was $350. Number 0774 CHAIR JAMES asked for a motion to adopt the amendments. Number 0781 REPRESENTATIVE PORTER moved to adopt Amendment 1 as Section 11. Hearing no objection, it was so adopted. Number 0825 REPRESENTATIVE GREEN moved to adopt Amendment 2 with changes. He moved to change the word "the" to "all" on page 1, line 3, Sec. 35.10.121. He wanted the fee to be used accordingly. The change was supported by the department. It still gave it flexibility. Hearing no objection, it was so adopted. Number 0922 REPRESENTATIVE PORTER moved to insert the language, "and political subdivisions of the state" after the language "except the State of Alaska," on page 2, line 25. Hearing no objection, it was so inserted. (Amendment 3) Number 0992 REPRESENTATIVE ROBINSON said she did not object to the amendment proposed by Representative Porter, but wanted to hear further from the state. She said not all municipalities were self-insured. Therefore, the ones that were self-insured were already paying. The bill would put everyone on an equal foot. Number 1045 REPRESENTATIVE PORTER replied self-insured municipalities were paying their own fees and claims. They were not avoiding a payment. The state, however, was not taking a portion of it. Number 1072 CHAIR JAMES said transferring money did not solve the overall problem for the state. Number 1155 REPRESENTATIVE OGAN asked Chair James if she was going to take any action on this bill today? Number 1166 CHAIR JAMES replied she was willing to move it out of the committee today. She did not know if she would vote in favor of the bill. She was willing to move it forward in the legislative process, however. Number 1176 REPRESENTATIVE OGAN said this was a policy issue as well. Furthermore, he believed there was a fourth power of government, the taxing authority of the agencies, and the bill further provided that power. The bureaucrats argued it was more efficient. He reiterated the bill further delegated the authority to let the bureaucrats tax. He felt it was inappropriate. Number 1244 CHAIR JAMES said she agreed with most of what Representative Ogan said. She was willing to move the bill forward, however. Number 1253 REPRESENTATIVE PORTER moved that CSHB 416(STA) am move from the committee with individual recommendations and attached fiscal notes. Representative Ogan objected. A roll call vote was taken. Representatives James, Green, Ivan, and Porter voted in favor of the motion. Representative Ogan voted against the motion. The bill moved from the House State Affairs Committee.
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